Will Hulk Hogan's sex tape award kill Gawker?

A jury has hit Gawker Media with $15 million in punitive damages and it's owner with $10 million, adding to the $115 million it awarded last week for publishing a sex video of Hulk Hogan.
USA TODAY

Hulk Hogan, whose given name is Terry Bollea, takes a moment as attorneys talk to the judge in court March 8, 2016, during his trial against Gawker Media in St. Petersburg, Fla. Hogan and his attorneys are suing Gawker, saying his privacy was violated and he suffered emotional distress after Gawker posted 1 minute, 41 seconds of a sex tape filmed of Hogan and his then-best friend's wife.(Photo: John Pendygraft, AP)

NEW YORK — Last week's jury verdict awarding Hulk Hogan $115 million in compensatory damages had some onlookers predicting the death of Gawker Media, a collection of gossip and news websites that was found to have invaded the privacy of the 1980s wrestling star by posting snippets of him in a sex tape online.

Monday, the Clearwater, Fla., jury upped Hogan's award by another $25 million for punitive damages. As a result, the total award has ballooned to $140 million, or more than three times the company's 2014 revenue.

Still, predictions of Gawker's demise are premature — despite evidence suggesting that Gawker may not have the cash to pay a $140 million award to Hogan, whose real name is Terry Gene Bollea.

That's because Gawker Media, which runs Gawker.com as well as Gizmodo.com and Jezebel.com, has several options at its disposal to reduce or even eliminate the money it might have to pay to Bollea.

For starters, the company is expected to ask the judge to reduce the overall award, a process known as remittitur, that allows judges to reduce a verdict if it is determined excessive. It is also expected to appeal the case and seek to have the verdict — and monetary damages that go with it — overturned.

"They will look at the size of that award, which is quite honestly a whopper, and what they are going to say is, 'Your honor, there is no way he (Bollea) can prove these are the actual damages,' " said Lucy Dalglish, a lawyer who has tried media cases and who is now dean of the journalism school at the University of Maryland.

Failure to convince the lower court judge to reduce the award followed by a loss in appeal could put Gawker in a tough spot financially, however. The privately held company has released financial data showing that Gawker Media earned $6.53 million in operating income in 2014 on revenue of $44.3 million.

It is estimated to be valued at $83 million — total.

"$115 million is punishment enough," Gawker's attorney, Michael Berry, told the jury as it weighed punitive damages Monday. "The verdict already rendered will be financial devastating" to the company, he said of the $115 million in economic damages awarded to Hogan last week.

Hogan's lawyers, however, argued that Gawker and its founder, Nick Denton, have plenty of money via Gawker Media's parent company, an entity known as GMGI. That entity, which owns Gawker's intellectual property, is estimated to be worth $276 million. Denton, by extension, is estimated to be worth as much as $121 million.

But GMGI was not a party to the case. And Denton's net worth minus his stake in the company is only $3.6 million, his lawyer said.

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Hogan sued Gawker for publishing snippets of a tape of him having sex with the wife of his former best friend, radio host Bubba the Love Sponge Clem. Hogan has said that he did not authorize the taping, which Gawker posted in 2012, and that its publication turned his world "upside down."

Hogan's lawyers argued that the tape was a private act between private people, and therefore it was not protected as news under the First Amendment.

Gawker's general counsel, Heather Dietrick, said the company will appeal based on evidence that was not allowed in the state court case, including text messages and statements made by Clem that suggested Hogan knew about the tapes before they were publicized.

"There is so much this jury deserved to know and, fortunately, that the appeals court does indeed know. So we are confident we will win this case ultimately based on not only on the law but also on the truth," Dietrick said.